Tyrosine 687 (Y687) of the Alzheimer’s amyloid precursor protein (APP) was shown to be phosphorylated in the brains of Alzheimer’s disease patients. This residue lies within a typical endocytosis consensus motif commonly found in molecules with receptor functions, strongly suggesting a potential role for APP in signal transduction. Consequently, the work here described addressed how phosphorylation of Y687 may be affecting APP in terms of its proteolytic cleavage and subcellular distribution. Our data show that the APP mutant mimicking constitutive dephosphorylation of Y687 had a faster turnover rate, both in terms of maturation and metabolism, when compared to Wt-APP-GFP and even more so when compared to the mutant mimicking constitutive phosphorylation. Thus, the mutant mimicking constitutively phosphorylated Y687 had a much higher t<sub>1/2</sub> and was significantly retained both in the ER and TGN. Additionally, this mutant was not incorporated into visible vesicular structures, with a concomitant dramatic decrease in Aβ production. Our findings point to the direct phosphorylation of APP on Y687 as an important regulatory mechanism in terms of determining the subcellular localization of APP and modulating its processing via different proteolytic pathways.